2014 (8) TMI 212 - AT - Customs

Clearance of capital goods imported duty free for use in NEPZ - Valuation of goods - Commissioner held that duty shall be leviable on the depreciated value of the capital goods - violation of the terms of relevant Customs Notification No.133/94, dated 22.06.1994 read with Notification No. 339/85-Cus dated 21.11.1985 - Held that - real controversy was whether the assessee had utilised the capital goods in accordance with the terms of Notification. But the issue framed by the Tribunal was altogether different. The issue framed erroneously was answered as the date debonding is the material date for the purpose of rate of duty for clearance of goods on payment of duty. The appeal was thus allowed by way of remand for re-calculating the amount of duty. Unfortunately, Revenue did not file appeal against this order - When the matter touches the root and Show Cause Notice alleges that no manufacture and export of end product was done for which duty forgone on the imported capital goods was sought to be recovered, that calls for a detailed examination of the entire material evidence on record to enquire whether the capital goods allowed to be imported by the assessee duty free were installed in NEPZ and utilized for any manufacturing activity carried out and whether export of end product was made - Following decision of appellant s own case reported in 2002 (8) TMI 369 - CEGAT, NEW DELHI - matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Whether duty shall be levied on the depreciated value of capital goods.
2. Allegations of non-utilization of duty-free capital goods for manufacturing and export.
3. Determining the utilization of imported capital goods for manufacturing activities.
4. Examination of evidence to ascertain the utilization of capital goods and export of end products.

Analysis:
Issue 1: The controversy revolved around whether duty should be levied on the depreciated value of capital goods. The Adjudicating Commissioner granted relief to the assessee, but the Revenue appealed against it. The Tribunal noted that the Commissioner proceeded beyond the law, alleging violations of various customs notifications and policies. The assessee contended that the duty levied was unwarranted due to no violation of the relevant customs notifications.

Issue 2: The core issue was the non-utilization of duty-free capital goods for manufacturing and export activities. The Revenue alleged that the capital goods were not utilized as required by the exemption notifications, leading to duty becoming chargeable. The assessee presented evidence of manufacturing operations in the NEPZ, including import-export details, certificates, and balance sheets, to prove utilization and value addition, arguing that depreciation was rightfully allowed.

Issue 3: The Tribunal highlighted the need for a detailed examination to determine whether the imported capital goods were installed and utilized for manufacturing activities. It emphasized the importance of verifying permissions, maintenance of records, power connection, input purchase and usage, statutory compliance, financial records, tax filings, labor utilization, and foreign exchange earnings during the relevant period to resolve the controversy.

Issue 4: The judgment emphasized the necessity of re-adjudication by the authority, focusing on examining the documents provided by the assessee's consultant to verify the allegations in the Show Cause Notice. The authority was directed to conduct any necessary inquiries to ensure justice, keeping all facts and legal arguments open for further consideration. Both appeals were remanded to the adjudicating authority for a comprehensive review and resolution of the issues raised.